Nick Hughes on entrepreneurship

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I wrote a post recently touching on my brief bout with Founder Depression. As a result, many mentioned it on Twitter or reached out to personally thank me for writing it and to let me know they also struggled with it.

This sparked a few thoughts: “Is depression actually normal?” And “if everyone deals with some sort of depression in their life then what can we do about it?”

I have come to realize depression is something all of us deal with at one point in our lives. It should not be taboo or anything. It should be addressed and talked about openly as part of the entrepreneurial education process. As founders, we encounter depression usually from external events such as failure of a business or a negative outcome of something in which we had hoped for when we first started out.

I am starting to realize being a great entrepreneur starts by perfecting how to handle the shit in your life. Because it hits the fan waaaaay more times than you plan. I have also come to understand the successful ones figure out how to identify the piles in the road ahead of time, and navigate accordingly before they hit something fatal.

Athletes strength train and stretch in prevention of injuries. Why are we not doing this in the startup community? Why are we not helping people to prevent what inevitably happens to those of us who strive for more?

The point here is to understand its not IF it will happen, its WHEN it will happen to you. And then go into your entrepreneurial journey armed with the idea that you will at times feel very down about yourself and your company. This is reality and this is serious. If a founder doesn’t take it as such they are potentially setting themselves up for disaster.

Like I did.

In a recent conversation with my father we touched on this. I noted that only when I realized I had dug myself into such a deep hole emotionally could I fully grasp where I was and what I had to do to get out of it.

I realized even though I was not in control of external events I was in control of my thoughts, feelings and internal dialog. And I was the only one who could bring myself out of the funk in which I had brought myself into. I had to consciously think and make decisions that would place me in a neutral or positive place.

No more negative self talk. No more whoa is me. No more pity parties and thinking I had let myself, my family and my community down. I had to stop fighting myself, put my ego aside and choose a different path. One that – although it has a few more twists, turns, roundabouts and curves to it – is leading me into an even better position than when I was CEO of my own little startup.

The fact is, if you are a high performer and things don’t turn out exactly the way you planned you will naturally tend to go into a dark place. Those sort of feelings will not help you move forward in any way whatsoever, so please think now about how you will respond once you sense yourself going down.

You might have asked someone recently, what the heck is going on with Bitcoin? Or maybe you are still wondering what Bitcoin is, or even questioning its relevancy?

A lot has changed in the last year in the cryptoworld — most notably Bitcoin’s price. It’s a good time to dissect a few points about Bitcoin and the cryptocurrency market, things I couldn’t help but notice during my first year in the industry.

The biggest point is the false dichotomy in the general perception of Bitcoin. I’d like to unpeel this and provide a deeper evaluation of the industry, because people who commit the mistake of false dichotomy do themselves a disservice by not taking a full view of what’s going on.

First, a definition to help us here:

A false dichotomy is a logical fallacy that presents two opposing views, options or outcomes in such a way that they seem to be the only possibilities: that is, if one is true, the other must be false, or, more typically, if you do not accept one then the other must be accepted.

As one of the few people here in Seattle who frequently (attempts) to explain Bitcoin to non-technical people, and being the one who handles customer interactions for Coinme, I have noticed a problem. The media, tech executives and the general public talk about Bitcoin mostly by committing to a false dichotomy. Quite amusingly, I find people either preach the positives of Bitcoin or they dismiss it, like Gagnam style. One side thinks we’ll live in a libertarian world where Bitcoin will eventually be an anonymized currency to rule us all, and the other believes it’s only for crooks in the shady, dark interwebs. “It’s doomed to fail!” they pronounce enthusiastically.

Well, neither are true.

When I read about a new random Bitcoin startup here, or a larger funding round there, I start to understand how things are changing, and in what direction. The more I talk with highly technical people who mine Bitcoin or build on top of the blockchain, I learn we’re very early in something very special. Even though we aren’t living in Crypto-utopia, there is a subtle rumbling deep within the Internet we should pay attention to.Studying Bitcoin and watching the markets adjust has taught me a very important lesson: nothing ever ends up being 100% of what you think it will be. Innovation cannot be predicted, and the future cannot be known ahead of time. Correctly predicting the future is simply a function of luck. But seeing around corners can be a function of deep listening, observing and learning. So the best action for success is to (safely) get as close to the something as possible, and learn as much about it as you can, so you start to identify where the world is heading. Only then are you equipped with perspectives on where to invest your time, capital and energy.

My time around Bitcoin has shown me that our world will not be changed as much by the cryptocurrency you read about today as by the underlying technology.

Joichi Ito, who has been involved in building many layers and pieces of the Internet — from helping start the first commercial Internet service provider in Japan to investing in Twitter and helping bring it to Japan — recently wrote about the similarities between Bitcoin and the internet:

The similarity is that Bitcoin is a transportation infrastructure that is decentralized, efficient and based on an open protocol. Instead of transferring packets of data over a dynamic network in contrast to the circuits and leased lines that preceded the Internet, Bitcoin’s protocol, the blockchain, allows trust to be established between mutually distrusting parties in an efficient and decentralized way. Although you could argue that the ledger is “centralized”, it’s created through mechanical decentralized consensus.

What Ito is saying is that we could actually be witnessing the early stages of the next phase of the connected world, a time not so dissimilar to what we experienced in the early 1990s.

An often quoted example of a false dichotomy was when the Internet first gained media attention in the early to mid-nineties. Back then, many people thought it was a fad, hard to understand and a waste of time and money. They simply couldn’t get their head around the fact that there were more than just two possibilities: A (success) or Z (failure).

And therein lies the fallacy of the false dichotomy around Bitcoin.

It’s clear to me and many others in the industry we are still in the “pre-browser” era of Bitcoin and blockchain technology. It’s there, but you really don’t know how to interact with it. What happens when we reach the “Netscape” moment of Bitcoin?

What we witnessed with the Internet was the invention of the web and the browser, which commercialized the internet and brought with it every major corporation in the world. By ending up somewhere between A and Z, the world changed forever.

It’s clear to me and many others in the industry we are still in the “pre-browser” era of Bitcoin and blockchain technology. It’s there, but you really don’t know how to interact with it. What happens when we reach the “Netscape” moment of Bitcoin?

Could Bitcoin — the currency — pop and crash?

Yes, it could.

But seeing investment dollars in the cryptocurrency/bitcoin market grow each quarter, one has to believe that if Bitcoin the currency pops, then something else will emerge even better and more suited for the general public.

What will that be?

I could take a guess but in reality I don’t have a clue. Yet committing the false dichotomy sin here is a grave mistake. An important point to understand is that Bitcoin, the cryptocurrency, is just one app that runs on the blockchain technology. People well-versed in bitcoin are familiar with the blockchain, the underlying open-source technology (or rails) that bitcoin the currency runs on. Looking deeper, theblockchain stack presents interesting solutions to problems which have hindered our society for quite some time — outside of finance. Issues such as trust, security and identity can be improved with applications built on the blockchain.

In fact, here are a few other areas where the blockchain serves as underlying technology.

OpenBazzar: An open peer-to-peer marketplace not controlled by any specific organization such as eBay or Craigslist. Ideas like this, using a decentralized platform to exchange goods and services, could change e-commerce as we know it.

Factom: A conceptual framework for a system that secures and proves the authenticity of records, documents or other important types of data that are later enshrined on the Bitcoin blockchain. This could transform how we handle record-keeping online.

Counterparty: An example of digitizing property and identity. Developers are starting to build networks that work in parallel to the Bitcoin blockchain to perform tasks that the bitcoin network can’t, but that make use of the bitcoin blockchain to, for instance, timestamp or validate work.

The reality is that no one really knows what will happen next — that is why it’s called innovation. But something is going to happen in this area to improve our lives and I hope you don’t get caught up in thinking only A or Z is possible.

Most likely somewhere in between A and Z we’ll see Bitcoin technologies enhance our digital lives. There’s more down there than you think.

No one knows it all. When it comes to startups and entrepreneurship things seem to change so quickly generally accepted conventional wisdom is actually becoming obsolete before our very eyes.

For that reason I strive to stay up to date with the industry, what’s taught at the major universities like Stanford, and what young founders are learning in accelerators like YCombinator.

Here are some resources I have been using recently to gain more insight as a founder and entrepreneur in the tech industry.

The Stanford ecorner is something I have been listening to for almost 6 years now. They record one speaker each week addressing the class and then post it to the site the next week. Topics range from Creativity & Innovation, Opportunity Recognition, Product Development, Marketing & Sales, Finance & Venture Capital, Leadership & Adversity, Team & Culture, Globalization, Social Entrepreneurship and Career & Life Balance. Stanford University’s Entrepreneurship Corner offers 3000 free videos and podcasts, featuring entrepreneurship and innovation thought leaders. I highly recommend it!

Startup Class – Stanford CS183B, taught by Sam Altman of YCombinator. CS183B is another class taught at Stanford. It’s designed to be a sort of one-class business course for people who want to start startups.

Videos of the lectures, associated reading materials, and assignments will all be available here. There will be 20 videos, some with a speaker or two and some with a small panel. It’ll be 1,000 minutes of content if you watch it all.

Reboot.io (podcasts) is a new resource put together by Jerry Colonna and his business partners. Jerry Colonna is an executive coach who uses the skills he learned as a venture capitalist to help entrepreneurs. He draws on his wide variety of experiences to help clients design a more conscious life and make needed changes to their career to improve their performance and satisfaction. The Reboot podcast will showcase the heart and soul, the wins and losses, the ups and downs of startup leadership. On the show, Entrepreneurs, CEO’s, and Startup Leaders will discuss with Jerry Colonna the emotional and psychological challenges they face daily as leaders.

The A16Z blog and podcasts are one of the best new daily resources an entrepreneur can read. As previous entrepreneurs and now some of the most popular venture capitalists, they provide their unique views of the technology market that will help any founder gain valuable insights on trends, investment thesis’ and the newest startups that are raising money and making a dent in the world.

In his book Zero To One, Peter Thiel asks the question “What one thing do you know that no one else in the world knows? What’s your secret?”

The answer to that question is the secret to starting a successful company.

What Thiel is suggesting is there are things in this world you observe, intuitively know and understand more than anyone else. By peeling apart those layers and understanding where there could be value creation you will find the golden nugget. Then it’s as simple as creating a new company, building the product and releasing it to the world.

What he is also illustrating here is that success comes from ingenuity and uniqueness, not copying others. The world doesn’t need another anonymous messaging app or social network.

It needs your secret.

Do you realize there are things only you know about the world? Most likely there things you continually notice about your everyday life, the city you live in or the technology you use that keep bugging you. There are problems you continually encounter where you might be wishing someone fixes them. Do you maybe see a better way to do them? Do you keep getting frustrated at the same places and times each day? There might be something you can do about it…

Once we come to grips with the magnitude of this reality starting a company becomes a lot different. You now realize each and every one of us have the ability to create successful companies. All it takes is a little focus and observation of the world around you, and then having the fortitude to create a scalable solution.

Today, think about what might not ever be created if you don’t build it?

At times we can be our own worst enemy. The challenge is to minimize those times.

We often hear choosing to become an entrepreneur – and the life that accompanies it – is not for the faint of heart. This is absolutely true. But for the longest time I didn’t really understand what it meant. Or moreover, I didn’t fully respect the ramifications of the simple choice of taking my entrepreneurial leap.

Yet now being on the other side of this experience, I understand on a deeper level what entrepreneurship all about, and how to best navigate through it the rest of my life. As I describe some of my thoughts and observations, I hope they might resonate with you as well and help you through whatever your situation you might be in currently.

Entrepreneurs, by default, are high performers. And high performers, by default, are hard on themselves when times get tough. Combine those two and you could get a deadly combination.

Entrepreneurs hold themselves to higher standards than others and often are disappointed when things don’t necessarily end up as great as they had thought when they initially set out. But you know what? Entrepreneurship never ends up like you initially thought. It’s messier than anyone ever imagines and more extreme than anyone ever describes.

After I experienced a failed startup I dropped into what I now can identify as a depression. I was not – and am not – depressed as in the clinical sense, but it was more like what you would think when people refer to the last economic depression we recently survived. It was temporary and externally triggered. Things weren’t right and I was responding to them certainly in a negative and self deprecating way.

It was painful. It felt troubling. It sucked because I wasn’t supposed to be there. Or so I thought.

What I discovered was I denied myself some truths I should have admitted at the time. I wasn’t admitting things like: 1) I really didn’t know what I was doing, and neither does anyone else. 2) The business was not working the way we had positioned it. 2) Startups actually do fail! 3) It’s okay to walk away rather than being so committed to a project you drive yourself into the ground. 4) Your personal value is more than just your company’s success.

I did not admit those things and the result was just that – nose dive right into the ground. Being a friend or family member you probably wouldn’t have known it by being around me. I am a damn good actor. I do a great job of burying the issue and grabbing another beer to selflessly talk about your challenges and issues.

Yet deep down inside was some of the worst self talk anyone could imagine. I was not my biggest cheerleader, supporter, believer and best friend. If you are wondering, negative self talk is not the path to success.

It took a few years to pull myself out of it. It took me accepting the fact that although I knew I could be a great founder at some point in my life, now was not the time. It took me putting my ego aside and accepting positions with other startups and companies where I could add value and learn more about building companies.

It seems elementary now, but letting go of the founder dream and using my skills in an another company was the farthest thing from my mind at the time. It took me admitting I did not know it all and I need to place myself somewhere to both earn a living and learn more about the world of technology and growing a business around it.

This type of wisdom and perspective is almost impossible when you think you are worthless. And that is exactly what people think when their startup fails. They think since they could not make their own company work – one where they pretty much put every ounce of effort they possibly could into making it work – what’s their value anywhere else? This and other similar thinking is obviously incorrect and ill applied. Yet, I am telling you this is exactly what I and other founders find themselves thinking.

I have since pulled myself back together, landed a great position with another company here in Seattle and on the path to learning and earning!

The resulting mental and emotional clarity is refreshing. It has allowed me to stabilize my life and opened up space for other projects like Founders RAW, Coinme, and getting back to writing. It has allowed me to establish myself as a mentor and advisor to other entrepreneurs, here and elsewhere in the world. It has allowed me to embrace and fully enjoy a meaningful relationship for the first time in a long time.

The lesson here is not that you can do things to avoid the founder depression. More than likely it’s inevitable for you, me and every other entrepreneur. The lesson is in identifying the oncoming founder depression, quickly observing its symptoms, and then finding mitigation strategies you can deploy to keep you afloat – and happy.

Entrepreneurship is not for the faint of heart. But it is for the wise and honest.

I recently noticed a frightening trend with certain founders in the tech industry.

–> Have a great idea. Get a few key people to join you and build it. Launch the product and raise money from investors. Experience massive success. Raise more money. Gain hundreds of millions of users. Raise billions of dollars and fight off regulators. Have unfiltered access to billions of people’s data. Exploit it. Believe you are the second coming of a God. Act like an uncaring, immoral capitalist. Care only about your wealth and not what you are doing to everyday citizens. And so on…

With the recent Uber misteps and observing the resulting outrage which ensued, it has come to my attention that we, as an industry, need to take a long look in the mirror. Founders need to take full consideration in how they are running their company, the culture they are creating, the data they are generating, and the ultimate consequences of their actions.

I hope Uber realizes they are doing to their users exactly what they were furious (I assume) about the government doing to them as citizens when the Snowden files were revealed last year.

We all need to understand we are standing at an unprecedented time in the history of business and technology. Everyday Joes now have the opportunity to create an app or platform that one day might just become indispensable to mankind. With its use, Joe will collect billions upon billions of data points on everyday citizens – like where they are currently, where they are going, who they talk to, what they typed, to whom, what they viewed on their phones, whom they connected with socially, etc.. With all this happening, Joe will find himself directly in the middle of our society, holding a treasure trove of personal data and a devil on his shoulder just waiting for the right time to temp him into exploiting it.

I mean, it’s like big brother!

But surprisingly it ain’t the government doing these things. Imagine what Facebook knows about you. Couple that with your Uber or Lyft usage data. Toss in your twitter clicks, Instagram photos, Gmail history and Google Chrome browser history.

We are doing this to ourselves. We are the ones creating this new world of massive data collection which is resulting in unprecedented spying, snooping, breaches of security, cloud hacks and the like.

This is your fault. And mine. It’s all of our faults. All in the name of making more money.

I am not here to end the data analysis, in fact I believe in it and when done correctly it makes for a better end user experience. I also know data collection is only going to get more prevalent with the expansion of categories like the Internet of Things and connected homes.

Yet, I am urging us to start thinking about things using a different filter, or scope of perspective. Start asking yourself these questions:

Recognizing all possible data about myself and every other person is now being collected, how to I structure my platform to preserve mankind and the humanity inherent within our society?

How do balance personalization of my technology with personal security of my users?

How do I proceed when I know I CAN do something but unsure if I SHOULD do something?

Where’s my “do not cross line?”

How can we best usher in a new era of technology applications where security is inherent within the structure of the product, not an afterthought when plugging holes after launch?

How do I shift my perspective from making the most money possible with my application towards making the world a better, more secure and protected society?

Please start thinking about these questions and more… It’s time we call a spade a spade – WE are the ones creating the exact surveillance society we were deathly afraid of growing up. We just thought it would be the Big Bad Government or another foreign country, not ourselves.

Please understand hubris will sink anyone who thinks they are immune to it. You – as a founder and someone desperately wanting to change the world – can now no doubt do just that. You and your technology can alter the history of humans here on earth. Just make sure you know what change you are putting in place.

I recently gave a talk to early stage entrepreneurs at a weekend hackathon in Bellingham, WA. It was fun, challenging and educational for all.

Given these individuals were just starting on their journey, I chose to focus on things they should be considering coming right out of the gate. Below are the three things I addressed with them and what I feel every founder needs to think about as they hack together their team and build out a first version of their product or service.

Cofounders

The very first thing you must think about is your team – whom should be on it and whom shouldn’t. Get it right or pay the price later.

Especially when you are starting something at a weekend event like a hackathon or Startup Weekend, it’s tempting to just grab abled bodies from anywhere so you so you can fill empty seats. This is not advised, since the wrong person on a can bring down the entire ship. It’s very important to fill specified roles within the team to put your company in the best position to succeed.

Here are the three positions I feel need to be filled if you are considering forming a team to build a software/app based startup:

The Developer. First – and especially if you are starting something in tech – you’ll need a technical person. This individual is the one who architects the product and who writes the code. Great engineers are able to balance pragmatism and perfectionism, are not averse to debugging and bugfixing, and employ a healthy skepticism of their code and the world around them. This is the engineer.

The Designer. Second, you’ll need someone who makes the code look pretty, readable to the layman allowing for a great user experience. Great designers understand that 90% of good design is not about the pixels, they understand basic coding and have a well rounded view of other sciences of the world. This is the designer.

The Hustler. Lastly you’ll need someone who can sell your product, or the one who understands how to get it in the market and found by people. This is generally the business person, the CEO, and the Hustler. To quote Fred Wilson, CEO’s really need to just focus on 3 things. They set the overall vision and strategy of the company and communicate it to all stakeholders. Recruit, hire, and retain the very best talent for the company. And lastly, make sure there is always enough cash in the bank. That’s the Hustler.

Fill those roles first, or deal with the consequences later.

Customer and User Validation

The second thing early stage founding teams need to think about is finding out who will actually use the product by doing customer discovery and validation. The knee jerk reaction of most founders is to believe they are so genius they can think up an idea in the shower, grab a few developers to build the app and then sit back and enjoy millions of downloads from all over the world.

NOT-GONNA-HAPPEN.

It’s imperative to get out of the door and talk to actual people who YOU THINK would be your end users. You need to interview them, asking questions about what problems they are encountering, why they are having those problems and how are they trying to solve them today (they usually just piece together a few random tools to solve it until something better arrives.) Figure out how they are doing it now so you can offer a solution 10x what is available on the market today.

And rather than trying to plan the entire thing out before talking to customers – like sitting in an office and writing a 30 page business – just start with a hypothesis, do some interviewing and testing on a few good ideas on how to solve it, and then adjust and pivot with the results you observe. You will learn more in a week or two of testing hypotheses than months/years of preparing a well written business plan full of (mostly) wrong assumptions.

Do your customer interviews now or learn later no one wants what you just built.

Product Simplicity

The last one is a biggie! It’s paramount a founding team understands their vision, know what they are trying to change in the world and then break it down into approachable pieces to start with.

As a founder you need to think about your entire vision as a large iceberg. The challenge is to find the tip of the iceberg and only release that as the first version. The rest of the iceberg is under water and very large, just as your entire vision is in your head and not visible to the rest of the world. Some think of this as an MVP (minimum viable product) and I concur, I just like the illustration better.

Most founders make the mistake of not finding (or determining) the tip of the iceberg and thus end up building the whole iceberg, resulting in lost time, a bloated product and a lost value proposition.

For every Uber – a very simple and easy to use app – there’s thousands of apps that get it wrong and initially build a too complex product. They end up confusing users and not even getting to the point of an exponential user growth curve.

Twitter was simply a status update and following what others were updating. That’s it and people could easily talk about it and share it with their friends. Snapchat was pictures you could send to friends that disappeared after 10 seconds. YO was absurdly simple, yet at least it was simple enough where millions of people got it and downloaded the app to mess with friends.

The key is to break down your complex problem into its essence. Know the end game and the large vision but find the simple starting point where millions of people will understand what to do with the app. Find the least amount of features and code possible to solve your initial problem.

These three principles are essential to a successful product launch. If not paid attention to they will hinder a startup team from building a product, launching it successfully and achieving any traction in the market.